Gold prices fell in European trading on Thursday for the first time in four sessions, retreating from a one-week high amid profit-taking and technical correction activity. The decline came under pressure from the continued recovery of the US dollar in foreign exchange markets.
The dollar remains on an upward path, rebounding from its lowest levels in over three years as investors resumed buying from lower levels ahead of the US jobs report for June, due later today, before the July 4 holiday.
The Federal Reserve relies heavily on such data to guide its monetary policy decisions, and the outcome is likely to influence current expectations around potential rate cuts this year.
Price Overview
Gold prices fell by 0.45% to $3,342.03, down from the session’s opening level of $3,357.58, after hitting a one-week high of $3,365.76 earlier in the session.
On Wednesday, gold rose 0.6% at settlement, notching a third consecutive daily gain following weak US private payrolls data.
US Dollar
The US dollar index rose 0.15% on Thursday, marking its second straight daily gain as it continued to recover from a three-year low at 96.38 points, reflecting broader strength across major and minor currency pairs.
Beyond technical buying, the dollar was supported by optimism surrounding a trade deal between the United States and Vietnam ahead of the July 9 tariff deadline.
President Donald Trump announced on Wednesday that Vietnam had reached a trade agreement with the US, a move he said could prompt other countries to follow suit.
Though details remain limited, Trump said Vietnamese goods would face a 20% tariff, while transshipped goods from third countries through Vietnam would be subject to a 40% tariff.
Chhanana of Saxo Bank said it’s now important to monitor China’s response, given that the move directly targets goods rerouted via Vietnam. He added this signals a clear restructuring of global supply chains, with further disruption likely.
US Interest Rates
Fed Chair Jerome Powell said tariffs have shifted the Fed’s outlook on the timing of future rate changes.
Data released Wednesday showed that US companies shed jobs in June for the first time since January 2022, prompting traders to adjust their expectations for a Fed rate cut.
According to the CME FedWatch Tool, the probability of a 25-basis-point rate cut at the July meeting rose from 20% to 25%, while the likelihood of no change fell from 80% to 75%.
Expectations for a September rate cut also rose from 93% to 95%, while odds of rates staying unchanged dropped from 7% to 5%.
US Jobs Report
Markets are now looking to today’s official monthly jobs report from the US Labor Department, which will include key figures such as non-farm payroll additions, unemployment rate, and average hourly earnings.
At 13:30 GMT, non-farm payroll data is expected to show the US economy added 111,000 jobs in June, down from 139,000 in May. The unemployment rate is forecast to rise to 4.3% from 4.2%, while average hourly earnings are seen increasing by 0.3%, down from the previous 0.4% rise.
Gold Outlook
Kelvin Wong, market analyst for Asia-Pacific at OANDA, said gold appears to be consolidating between $3,320 and $3,360 as the market adopts a wait-and-see approach ahead of the NFP data and ISM Services PMI, rather than entering large positions.
Wong added that the Vietnam trade deal has likely already been priced in, and the market’s main focus now is on unresolved agreements with larger economies.
SPDR Gold Trust
Holdings in the SPDR Gold Trust, the world’s largest gold-backed ETF, fell by 0.57 metric tons on Wednesday, marking a third straight daily decline. Total holdings now stand at 947.66 metric tons, the lowest level since June 18.
